A Wild And Crazy Year So Far

I am talking about the stock market year-to-date.

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Every day since the year started, the Dow Jones Industrial Average, the most widely watched American index, has swung up or down in the triple digits i.e. over 100 points.

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In fact, the average swing each day since Jan 1, 2015 has been 268 points for the Dow.

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What does this mean to the average Joe?

In a nutshell, volatility means worry for the future. And investors hate volatility.

The good news is there were four large changes of the DOW of more than 300 plus or minus points before a recession happened in 2008.  So we can predict the next recession.

Here is an excellent detailed look at the current volatility by Forbes.

http://www.forbes.com/sites/billgreiner/2015/01/23/stock-market-volatility-and-what-its-return-means-for-the-global-financial-system/

Now that is wild and crazy.

8 Things To Do When Recession Happens

Yeah it is not a matter of IF but WHEN the next recession will happen.  Sorry.  You could go ride a roller coaster to get your mind off of it.  Or you could do these things.

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Recessions occur every 4 to 8 years in a society with capitalism and little regulation.  And since the last one was in 2008….

Here’s what you should do.

1. DON’T PANIC – Stay calm.  Most people will be doing one thing – panicking. You won’t.

2. THINK, THINK, THINK – Be smarter than the rest. Know when to sell, when to buy and, like Kenny Rogers, when to hold.

3. SET UP ALERTS – Get an E*Trade or other brokerage account and set up messages when Dow (DJIA) goes up 3% or goes down 3% in a day.

4. RECALIBRATE AT NOON EASTERN TIME – If you have time, think about your next sell or buy of what and for how much before the market closes.

5. IF UP, SELL – When there is a jump up in stocks, sell your stock and funds 25-35% at a time.  You may have to wait to use the money.   Time is on your side.

6. IF UP AND GOLD IS DOWN, BUY GOLD – Gold usually moves opposite of stocks, so buy gold or gold mining funds such as NEM which will move up when stocks crash.

7. IF UP, BUY SHORTS – Shorts are stock buys that you expect to go down.  Pick losers on purpose.  Also choose bearish ETFs such as PILS and TECS that rise if the stock price of pharmaceutical or tech companies goes down.

8. IF DOWN, WAIT – Remember we agreed to not panic.

There will be four 400+ gains or losses of the DOW before a recession happens.  Anybody can take advantage of them. And I know you will. (There have been 4 days in August and September 2015 with over 400 point ups and downs.)

Or you can go ride a roller coaster to get your mind off of the market’s ups and downs.

P.S. I care about you, but can’t be held responsible for your results.

Revised: 04/10/2016 DUG is volatile since oil producers are considering fixing output quantities.

Wall Street Crash Could Happen Again

On April 8, 2013 new more sophisticated Securities and Exchange Commission rules seeking to prevent another flash-crash tookeffect, but some observers are dubious about how effective they will be in another crisis-situation.

On August 1, 2012 the Knight Capital Group had a $400 million trading snafu.

On May 6, 2010, the Flash Crash occurred where the Dow Jones fell 9.2% in a matter of minutes.  Finally a short story that explains how it could have happened and how it might happen again. 

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Click on Flash Crash Epitaph  to read this short story.  Enjoy!

Flash Crash Epitaph – A Short Story

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On May 6, 2010, the Flash Crash occurred.

Finally a non-technical short story that explains how it could have happened and how it might happen again.

The latest article to mention the Flash Crash is http://www.usatoday.com/story/money/markets/2013/02/13/dow-nears-new-peak-amid-eerie-calm/1912509/

Click on Flash Crash Epitaph  to read this short story.  Enjoy!